The Effect of Debt on Company Value and Its Sustainable Development and Its Relationship with Industry in Southeast Asia : Empirical Evidence from the Quantile Regression Method

This paper analyses the effects of different levels of debt on firm value in ASEAN countries from 2010 to 2020. Difference from the prior studies, we employ quantile regression to investigate the effects of different levels of debt on firm value. We find that for a firm with a lower firm value, debt could increase firm value and acts as a disciplinary mechanism for managers' opportunistic behavior, and contributes to minimizing agency costs between shareholders and managers, as supported by the agency theory. However, from the 50th percentile onwards, the influences of different levels of debt on firm value change from positive to negative, inferring that debt leads to high costs related to debt financings, including bankruptcy, financial distress, and agency costs. Moreover, other variables, such as firm size, tangible assets, growth opportunities, and liquidity, significantly affect firm value. Another important point seen from our findings is that the impact of different debt levels on firm value is different for each country and affects sustainable development programs in each country. Our findings provide useful implications for corporate managers in ASEAN countries in accessing debt to finance corporate projects, taking advantage of tax protections, minimizing agency costs between shareholders and managers, and supporting sustainable development